Director General, Department of Services, Technology and Administration v Veall (No 4)

[2011] NSWSC 904

Supreme Court

New South Wales

Medium Neutral Citation:

Director General, Department of Services, Technology and Administration v Veall (No 4) [2011] NSWSC 904

Hearing dates:

15 August 2011; 16 August 2011

Decision date:

18 August 2011

Before:

Buddin J

Decision:

(a) Between 1 March 2003 and 3 August 2009, TLC engaged in conduct which was misleading or deceptive, or likely to mislead or deceive within the meaning of s 52 of the TPA and s 42 of the FTA . It also engaged in conduct which was unconscionable within the meaning of s 51AB of the TPA and s 43 of the FTA ;

(b) The second defendant was directly or indirectly, knowingly concerned in or a party to, the said contraventions of TLC within the meaning of s 75B of the TPA and s 61 of the FTA .

Catchwords:

Introduction agency - allegations of misleading and deceptive conduct - allegations of unconscionable conduct -accessorial liability of the second defendant - ex parte proceedings

Legislation Cited:

Fair Trading Act 1987 (NSW)
Trade Practices Act 1974 (Cth)

Cases Cited:

Commissioner of Fair Trading v TLC Consulting Services Pty Ltd & Ors [2011] QSC 233

Director General, Department of Services, Technology and Administration v Veall (No 1) NSWSC 209
Director-General, Department of Services, Technology and Administration v Veall (No 2) NSWSC 358

Category:

Interlocutory applications

Parties:

Director General, Department of Services, Technology and Administration (Plaintiff)
Helen Dimitrijevski (Second Defendant)

Representation:

Counsel:
G Sarginson (Plaintiff)
No appearance (Second Defendant)
Solicitors:
M Nicoletti (Plaintiff)

File Number(s):

2009/325996

Publication restriction:

Nil

Judgment

1. By Amended Statement of Claim filed on 2 November 2010 the plaintiff seeks injunctive and declaratory relief as well as orders for restitution against the three defendants. The claims for relief arise out of the operation of a business known as TLC Counselling Pty Limited (TLC) as an introduction agency.

1. These reasons are to be read in conjunction with two earlier judgments: Director General, Department of Services, Technology and Administration v Veall (No 1) NSWSC 209 [the first judgment] and Director-General, Department of Services, Technology and Administration v Veall (No 2) NSWSC 358 [the second judgment]. In the first judgment I determined that the proceedings in respect only of the first and third defendants should proceed on an ex-parte basis. The sole issue with which I was then concerned was the issue of liability. On 24 March 2011, for reasons which were canvassed in that judgment, I adjourned the proceedings in respect of the second defendant to a later date. In order to provide a context for the present proceedings, I shall repeat what I said at paragraphs 3 - 10 of the second judgment which was published on 3 May 2011.

The proceedings arise from the activities of a company known as TLC Consulting Pty Limited (TLC). TLC is an acronym for 'True Love Corp'. The company operated as an introduction agency and advertised its services in a range of various magazines which included Rugby League Week, Cleo, Ralph, Cosmopolitan, Outback Magazine and Inside Football. It represented itself as an agency that was designed to assist its clients meet and form relationships with other people to whom it introduced them. The company operated from approximately 1996 until it was placed into administration on 3 August 2009. On 8 September 2009 a liquidator was appointed as a result of a creditors' voluntary winding-up. The second and third defendants each became bankrupt on 10 June 2010, with the first defendant following suit on 13 December 2010.

On 30 April 2003 Atkinson J made orders in the Supreme Court of Queensland in proceedings in which the applicant was the Commissioner of Fair Trading of that State. The first respondent in those proceedings was TLC whilst the second and third defendants in these proceedings were the third and second respondents respectively in those proceedings. The following orders were made by consent:

1 The First, Second and Third Respondents by themselves, their servants and/or agents, and/or representatives be restrained permanently, from carrying on the business of offering to find, or finding persons to be introduced, or introducing persons to others ('introduction services'), such business including:

(a) providing introduction services to persons resident in Queensland other than to persons who are parties to existing contracts for the provision of such services by the First Respondent;

(b) accepting payment or other consideration for such introduction services from persons residing in Queensland whether under existing contracts or otherwise including accepting any further payment or other consideration from persons who are parties to existing contracts for the provision of introduction services by the First Respondent;

(c) making available to persons, wherever located, information concerning persons available to be introduced who reside in Queensland, other than to persons who are parties to existing contracts for the provision of such information by the First Respondent;

(d) introducing to persons, wherever located, persons resident in Queensland; other than persons who are parties to existing contracts with the First Respondent for the introduction of themselves to other persons;

(e) entering into contracts with persons resident in Queensland for the provision of introduction services.

("providing introduction services in Queensland").

2 The orders in paragraph 1 above commence to operate 7 days from the date these orders are made.

3 The First, Second and Third Respondents pay to the Applicant the following sums:

(a) $396,111.00 by way of compensation pursuant to section 100 (5) (d) of the Fair Trading Act 1989 (Qld);

(b) $37,500.00 by way of interest on the amount of $396,111.00.

The combined amount of $433,611.00 shall be paid within 120 days from the date of this order, the liability for such payment being joint and several.

4 The Applicant will distribute the amount of $433,611.00 as follows:

(a) To Andrew George the sum of $95,000.00

(b) To the remaining persons listed in the Schedule to the Originating Application except for:

(i) Brett Anthony Elliott

(ii) Conan Kelly.

The balance of $338,611.00 on a pro-rata basis

5 The First, Second and Third Respondents will cause a notice to be published on all the First Respondent's websites including the website at the address stating that the First Respondent is unable to offer or provide introduction services in Queensland (as that term is defined in paragraph 1 above), such notice to appear for at least six months from the date of these orders.

6 The First, Second and Third Respondents pay the Applicant within 120 days of the date of this order costs fixed in the amount of $130,000.00.

I was informed that the proceedings in respect of the second defendant for contempt of court, to which I referred in Veall [No 1] , arose from the alleged contravention of those orders.

Between February 2003 and July 2008, TLC operated out of premises at Suite 9, 10 Sands Street, Tweed Heads. For some of that time its registered office was also at those premises. Some time between July and December 2008, TLC moved to premises in Southport in Queensland. From there it operated Australia wide and continued to contact and promise services to its clients and other persons in NSW. Following the move to Queensland, TLC shared premises with Stangs Finance Pty Limited (Stangs). TLC and Stangs shared the same post office box address as their respective contact addresses for the Australian Securities and Investments Commission (ASIC).

The first defendant was employed by TLC in March 2007 and continued working with the company until 2009. She was paid a salary and also received a commission. Payroll records reveal that for the 2007-2008 financial year she received a gross income of $105,534.24 and for the 2008-2009 financial year a gross income of $141,286.71. From 1 January 2009 she was listed as the sole director of TLC. In January 2010 she filed documents with ASIC requesting that she be removed from the ASIC registry as a director. She claimed that she had not realised that she had been appointed as a director and that the second defendant had effected her appointment without her permission.

Although the second defendant was never a director of TLC, she nonetheless drew a salary from it. She also operated the company's bank accounts. She was at all relevant times involved in its management and was described by former employees as its "boss". She and her husband (the third defendant) were signatories to TLC's bank account with the National Australia Bank whilst the third defendant was a signatory to the company's bank account with Westpac. The third defendant was the sole director and shareholder of TLC from 8 February 1996 until 1 January 2009. As well as drawing a salary from TLC, the third defendant had an interest in Stangs which operated from the same premises as TLC.

The plaintiff claims that TLC made a large number of representations concerning the services it would provide to its clients. Various persons were employed as 'consultants' by TLC, including the first defendant. It was their task to communicate those representations, usually by telephone, to the company's clients. The essence of the plaintiff's complaint, in broad terms, is that what was represented either did not eventuate at all, or if it did, it did so in a manner that fell well short of what had been promised. As a result, it is claimed that TLC engaged in misleading and deceptive conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) (the TPA) and/or s 42 of the Fair Trading Act 1987 (NSW) (the FTA), and in unconscionable conduct in contravention of s 51AB of the TPA and/or s 43 of the FTA. Of particular significance in the present proceedings is the plaintiff's claim that each of the defendants, by reason of his or her connection with TLC, aided or abetted and/or was knowingly concerned in the conduct of TLC such as to attract the provisions of the TPA and/or the FTA to which I have just referred. (Many of the legislative provisions referred to in this judgment have now been repealed and replaced, but that has no bearing upon these proceedings).

The particulars of the representations in question, as well as the impugned conduct, are identified in the Amended Statement of Claim. Although there are numerous representations which are relied upon, the essential nature of the complaint is that over an extended period of time TLC, by its conduct, took advantage of persons, predominantly men, who were in an emotionally vulnerable position and exploited their vulnerability to those persons' considerable financial disadvantage.

1. Following the hearing of the matters in respect of the first and third defendants, I made the following findings.

(a) Between 1 March 2003 and 3 August 2009, TLC engaged in conduct which was misleading or deceptive, or likely to mislead or deceive within the meaning of s 52 of the TPA and s 42 of the FTA . It also engaged in conduct which was unconscionable within the meaning of s 51AB of the TPA and s 43 of the FTA ;

(b) The first defendant from 12 March 2007 was directly or indirectly, knowingly concerned in or a party to, the said contraventions of TLC within the meaning of s 75B of the TPA and s 61 of the FTA ;

(c) The third defendant was directly or indirectly, knowingly concerned in or a party to, the said contraventions of TLC within the meaning of s 75B of the TPA and s 61 of the FTA .

1. This judgment concerns the proceedings in respect of the second defendant upon the issue of liability. Because I determined that they too should proceed on an ex-parte basis, it will be necessary to say something about the events which have unfolded since I granted the adjournment on 24 March 2011. Since then the proceedings have been listed for directions on a number of occasions. A psychiatrist, Dr Stephen Huntsman, examined the second defendant on 27 April 2011. In a report of that date Dr Huntsman recorded that the second defendant had been treated, at various times during March and April 2011, for depression and suicidal ideation. He said that she had been treated at the Mental Health Units of both Tweed Heads and Gold Coast Hospitals. Dr Huntsman opined:

Given her current clinical condition, I do not believe she could properly give instructions to a solicitor or adequately prepare her defence. I would also have concerns as to the potential for serious deterioration of her mental state, given the stress of previous legal proceedings.

I would anticipate that with a satisfactory response to treatment, she would be in a much improved position in regard to these matters in a further two months. I would therefore request that you give consideration to adjourning proceedings.

1. In due course arrangements were made, at the behest of the plaintiff's legal representatives, for the second defendant to be psychiatrically examined. An arrangement was made for her to see a psychiatrist, Dr Nigel Prior, in Brisbane on 13 July 2011. The second defendant did not keep the appointment. The efforts which the representatives of the plaintiff have made in order to provide the second defendant with appropriate notification of the appointment are detailed in the affidavit of a solicitor, Mark Nicoletti, dated 26 July 2011 which was read in these proceedings. From that material, together with other information which is available to the Court, I am satisfied that the second defendant was advised, not only of that appointment, but also of the general progress of the matter. Mr Nicoletti, who is the solicitor representing the plaintiff, also details the efforts which were made to effect service upon the second defendant. A process server attempted unsuccessfully to effect service at three different addresses with which the second defendant has, in recent times, been associated. Correspondence sent to one of those addresses has not been returned. Correspondence sent to a second address has been returned, but the envelopes appeared to have been opened. Finally, correspondence sent by registered post have been collected and signed for by a person whom Australia Post has identified as a person who is authorised to collect mail on behalf of both the second and third defendants. Mr Nicoletti has sworn another affidavit, dated 15 August 2011, which was also read in the proceedings. It details the efforts which the plaintiff has made to notify the second defendant of the date of this hearing. A letter, which was despatched by registered post, was not returned. A process server was engaged to effect personal service upon the second defendant and that attempt was also unsuccessful.

1. A little earlier I referred to the fact that proceedings had been instituted against the second defendant in the Supreme Court of Queensland for contempt of court. Those proceedings, as I have indicated, arose out of alleged breaches of the orders made by Atkinson J on 30 April 2003. Those proceedings were adjourned from March of this year until July upon the basis that the second defendant would be unfit to attend court for a period of four months. The second defendant apparently did not appear to face those proceedings which were listed to commence on 20 July 2011. For reasons which Her Honour gave, Philippides J proceeded to hear the matter in the absence of the second defendant. Her Honour found that the second defendant was in contempt of the orders of Atkinson J: Commissioner of Fair Trading v TLC Consulting Services Pty Ltd & Ors [2011] QSC 233 . I was informed that the second defendant has been ordered to appear for sentence on 3 October 2011.

1. When the current matter was called on for hearing, the second defendant did not appear. Furthermore, neither the Court nor the plaintiff's representatives have received any communication from the second defendant, or anyone on her behalf, since the report of Dr Huntsman was received in late April. It was against that background that I determined that the matter in respect of the second defendant would proceed ex-parte.

The necessary legal elements

1. At paragraphs 11 - 23 of the second judgment I identified, in the following terms, the matters which the plaintiff had to establish:

The legal requirements

(a) Misleading or deceptive conduct

Section 52 of the TPA is in the following terms:

(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

(2) Nothing in the succeeding provisions of this Division shall be taken as limiting by implication the generality of subsection (1).

See also s 42 of the FTA .

In Butcher v Lachlan Elder Realty Pty Limited (2004) 218 CLR 592, McHugh J (although dissenting in the result) observed that:

The question whether conduct is misleading or deceptive or is likely to mislead or deceive is a question of fact. In determining whether a contravention of s 52 has occurred, the task of the court is to examine the relevant course of conduct as a whole. It is determined by reference to the alleged conduct in the light of the relevant surrounding facts and circumstances. It is an objective question that the court must determine for itself. (at 625)

See also Higgins v Sinclair [2011] NSWSC 163 at paras 192-198.

(b) Unconscionable conduct

Section 51 AB of the TPA provides that:

(1) A corporation shall not, in trade or commerce, in connection with the supply or possible supply of goods or services to a person, engage in conduct that is, in all the circumstances, unconscionable.

(2) Without in any way limiting the matters to which the court may have regard for the purpose of determining whether a corporation has contravened subsection (1) in connection with the supply or possible supply of goods or services to a person (in this subsection referred to as the consumer), the court may have regard to :

(a) the relative strengths of the bargaining positions of the corporation and the consumer;

(b) whether, as a result of conduct engaged in by the corporation, the consumer was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the corporation;

(c) whether the consumer was able to understand any documents relating to the supply or possible supply of the goods or services;

(d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the consumer or a person acting on behalf of the consumer by the corporation or a person acting on behalf of the corporation in relation to the supply or possible supply of the goods or services; and

(e) the amount for which, and the circumstances under which, the consumer could have acquired identical or equivalent goods or services from a person other than the corporation.

(3) A corporation shall not be taken for the purposes of this section to engage in unconscionable conduct in connection with the supply or possible supply of goods or services to a person by reason only that the corporation institutes legal proceedings in relation to that supply or possible supply or refers a dispute or claim in relation to that supply or possible supply to arbitration.

(4) For the purpose of determining whether a corporation has contravened subsection (1) in connection with the supply or possible supply of goods or services to a person:

(a) the court shall not have regard to any circumstances that were not reasonably forseeable at the time of the alleged contravention; and

(b) the court may have regard to conduct engaged in, or circumstances existing, before the commencement of this section.

(5) A reference in this section to goods or services is a reference to goods or services of a kind ordinarily acquired for personal, domestic or household use or consumption.

(6) A reference in this section to the supply or possible supply of goods does not include a reference to the supply or possible supply of goods for the purpose of re-supply or for the purpose of using them up or transforming them in trade or commerce.

(7) Section 51A applies for the purposes of this section in the same way as it applies for the purposes of Division 1 of Part V.

See also s 43 of the FTA .

In Director-General of the Department of Fair Trading v Monaghan [2003] NSWSC 1099, Bell J observed:

It was common ground that the principles stated by the High Court in Commercial Bank of Australia Ltd v Amadio (1982-1983) 151 CLR 447 concerning unconscionability for the purposes of the common law have application when considering unconscionability for the purposes of s 43(1) of the FTA. In Amadio Mason J observed at 461:

"But relief on the ground of 'unconscionable conduct' is usually taken to refer to the class of case in which a party makes unconscientious use of his superior position or bargaining power to the detriment of a party who suffers from some special disability or is placed in some special situation of disadvantage, e.g., a catching bargain with an expectant heir or an unfair contract made by taking advantage of a person who is seriously affected by intoxicating drink. Although unconscionable conduct in this narrow sense bears some resemblance to the doctrine of undue influence, there is a difference between the two. In the latter the will of the innocent party is not independent and voluntary because it is overborne. In the former the will of the innocent party, even if independent and voluntary, is the result of the disadvantageous position in which he is placed and of the other party unconscientiously taking advantage of that position."

Deane J, in the same case, observed at 474:

"The jurisdiction of courts of equity to relieve against unconscionable dealing developed from the jurisdiction which the Court of Chancery assumed, at a very early period, to set aside transactions in which expectant heirs had dealt with their expectations without being adequately protected against the pressure put upon them by their poverty. The jurisdiction is long established as extending generally to circumstances in which (i) a party to a transaction was under a special disability in dealing with the other party with the consequence that there was an absence of any reasonable degree of equality between them and (ii) that disability was sufficiently evident to the stronger party to make it prima facie unfair or 'unconscientious' that he procure, or accept, the weaker party's assent to the impugned transaction in the circumstances in which he procured or accepted it. Where such circumstances are shown to have existed, an onus is cast upon the stronger party to show that the transaction was fair, just and reasonable: 'the burthen of shewing the fairness of the transaction is thrown on the person who seeks to obtain the benefit of the contract' (see per Lord Hatherley, O'Rorke v. Bolingbroke (1877) 2 App. Cas., at p. 823; Fry v. Lane (1888) 40 Ch.D. 312, at p. 322; Blomley v. Ryan (1956) 99 CLR 362, at pp. 428-429).

The equitable principles relating to relief against unconscionable dealing and the principles relating to undue influence are closely related. The two doctrines are, however, distinct. Undue influence, like common law duress, looks to the quality of the consent or assent of the weaker party (citations omitted). Unconscionable dealing looks to the conduct of the stronger party in attempting to enforce, or retain the benefit of, a dealing with a person under a special disability in circumstances where it is not consistent with equity or good conscience that he should do so. The adverse circumstances which may constitute a special disability for the purposes of the principles relating to relief against unconscionable dealing may take a wide variety of forms and are not susceptible to being comprehensively catalogued. In Blomley v. Ryan , Fullagar J. listed some examples of such disability: 'poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary' As Fullagar J. remarked, the common characteristic of such adverse circumstances 'seems to be that they have the effect of placing one party at a serious disadvantage vis-a-vis the other'".

In Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; 77 ALJR 1853 the High Court discussed the concept of unconscionable conduct in a case involving a claim for equitable relief against forfeiture. In that context Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ in their joint judgment observed at [23] that the phrase "unconscionable conduct" tends to mislead in the several respects that are discussed in the succeeding paragraphs. By these proceedings the Plaintiff claims orders under the FTA in respect of unconscionable conduct engaged in by the First Defendant in the supply of services to various of her clients. Section 43 of the FTA is not confined to a consideration of the circumstances as they existed at the time of the formation of the contract but includes consideration of conduct that occurs during the course of the contract. In Holloway v Witham (1990) 21 NSWLR 70 Lee CJ at CL said at 74:

"But important though it be that the Act enables the Commissioner to make applications on behalf of consumers for compensation, the real virtue in the Act, in so far as it is aimed at unfair trading, is that it enable remedies available to consumers and/or the Commissioner which are dependent, not upon breach of contract by the trader, but upon proof of specific conduct on the part of the trader as defined in the Act. The fact that the trader may by reason of the conduct engaged in be in breach of the contract, is largely irrelevant to the pursuit of remedies provided by the Act and, equally, breach of contract by the consumer will not necessarily displace the right of the consumer to the remedies provided in respect of the conduct of the supplier. In Holt v Biroka Pty Ltd (1988) 13 NSWLR 629, Kearney J held that s 4(4) of the Act, in defining "conduct", produced the result that the conduct to be considered was the whole of the conduct related to the contractual bargain and its performance and I respectfully adopt that view - it plainly carries out the purpose of the Act." [at paras 11-12]

Accessorial liability of the defendants

Section 75B(1) of the TPA provides that:

(1) A reference in this Part to a person involved in a contravention of a provision of Part IV, IVA, IVB, V or VC, or of section 95AZN, shall be read as a reference to a person who:

(a) has aided, abetted, counselled or procured the contravention;

(b) has induced, whether by threats or promises or otherwise, the contravention;

(c) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention ; or

(d) has conspired with others to effect the contravention. (emphasis added)

See also s 61 of the FTA .

As the focus of the plaintiff's case has been upon s 75B(1)(c) of the TPA , it is necessary to identify what it must establish in order to satisfy that particular provision. The concept of being "knowingly concerned" has both a physical and a mental element.

(a) the physical element

In Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd [2002] FCAFC 157, Weinberg and Dowsett JJ in their joint reasons, observed:

... At a practical level, the following passage from the judgment of Wilcox J in Trade Practices Commission v Australian Meat Holdings Pty Ltd (1988) ATPR 40-876 at 49,512 demonstrates the relevant considerations:

"The words 'knowingly concerned' are commonly found in statutory provisions creating criminal offences. In that context the word 'concerned' has been read as requiring facts connecting the accused with the commission of the relevant offence. ... In Ashbury v Reid, the Full Court of the Supreme Court of Western Australia, after quoting the Oxford Dictionary definition of 'concerned', said at p51:

'The question which a court should ask itself in determining whether an act or omission on the part of an individual comes within the terms of s54 is whether on the facts it can reasonably be said that the act or omission shown to have been done or neglected to be done by the defendant does in truth implicate or involve him in the offence, whether it does show a practical connexion between him and the offence .'

(R v Tannous) is an interesting case, in the present context. The appellant had agreed with two other persons that certain money owing to him could be used in the importation of cannabis, in the sale of which he was to become a participant. He took no other part in the enterprise. In fact his money was not used so that there was no causal relationship between the involvement of the appellant and the actual importation. Notwithstanding this, the Court held that there was evidence upon which he could be convicted of being knowingly concerned in the importation. At p308 - p309, Lee J said:

The 'concern' to which the section speaks is not a concern personal to the appellant in the sense of being in his mind, but it is a concern which can be demonstrated objectively by reference to his association, whatever it may be, with the importation. It must be shown that he is 'concerned in' not just 'concerned about the importation'. A father, learning that his son had made arrangements to import narcotic drugs into this country, might well be anxious about, interested in or concerned about the fact and he might evince that anxiety, interest or concern to others. But he would not be guilty of the offence of being knowingly concerned merely from his knowledge of the importation and his state of mind arising therefrom. Before he could be convicted under the section he would have to do something to connect himself with or involve himself in the importation .... [at para 154] (emphasis added)

In Rafferty v Time 2000 West Pty Limited (No 4) [2010] FCA 725 Besanko J said:

In Fencott v Muller (1983) 152 CLR 570, the High Court held that s 75B of the TPA is a valid law of the Commonwealth. In the course of his reasons, Gibbs CJ said (at 584):

"By the combined provisions of ss. 75B and 82, the Parliament has made natural persons liable in damages for a contravention by the corporation only if they have been involved in the manner described by s. 75B, which, in my opinion, refers to a close rather than a remote involvement in the contravention. In the most general words of s. 75B, those of par. (c), the word 'knowingly' significantly confines the operation of the provision."

In a case where a party seeks to establish that another party has been involved in a contravention within s 75B(1) of the TPA, there are two questions. The first question is whether the person's acts are sufficient to bring the person within the terms of the subsection. The second question is whether the person has sufficient knowledge for the purposes of the subsection.

In terms of the authorities, a common case to come before the Courts is a case where a corporation has been guilty of misleading or deceptive conduct and an applicant seeks to make liable a director of the corporation who made representations or otherwise participated in the misleading or deceptive conduct. In those cases, the second question is likely to be the one which determines the outcome of the case. However, s 75B(1) has resulted in many other groups being held liable in respect of a contravention by another. In Sutton v A J Thompson Pty Ltd (in liquidation) (1987) 73 ALR 233, the company's accountant was held liable under s 75B(1) of the TPA. The representations which formed the basis of the misleading and deceptive conduct were made during discussions at which the accountant was present and in which he took part. In Heydon v NRMA Ltd (2000) 51 NSWLR 1, McPherson A-JA (with whom Ormiston A-JA agreed) said, obiter , that solicitors engaged to advise on a prospectus would fall within s 75B(1)(a) or s 75B(1)(c) provided they had the knowledge required by that section (at 150 [436]).

There is not a great deal of authority on the level of involvement required in order to establish that a party was "knowingly concerned in" or "party to" a contravention within s 75B(1)(c).

In Butt v Tingey (1993) ATPR (Digest) 46-110 a claim was made that a solicitor had been knowingly concerned in a contravention of s 52 of the TPA. The solicitor had been retained by Blu-Binda Marina Pty Ltd. Blu-Binda had entered into a contract to sell a motor vessel to the respondent. Blu-Binda had accepted part-payment from the respondent in the form of money and an old vessel which Blu-Binda had promptly sold. Blu-Binda failed to deliver the new vessel to the respondent. The respondent sought return of the funds provided and an assurance that they would not be distributed. The solicitor for Blu-Binda wrote to the respondent by facsimile indicating that the funds would not be disbursed. In fact, the funds had already been applied to Blu-Binda's overdraft facility.

At first instance, the solicitor was held liable. This decision was overturned on appeal by Neaves and Beazley JJ (Davies J dissenting). The majority held that the solicitor in question did not have actual knowledge that the funds had been applied to the overdraft. Their Honours also held that the evidence did not establish that the solicitor was doing anything more than conveying to the respondent's solicitors the essence of the instructions he had received. Davies J, in dissent, held that, by giving his authority as a solicitor to the facsimile and letter, the solicitor had knowingly assisted Blu-Binda to mislead and deceive the respondent.

In Nescor Industries Group Pty Ltd v Miba Pty Ltd (1997) 150 ALR 633, Davies J said (at 641):

"Agents may be held to be in breach of the statutory provision either because they are directly responsible for the misleading information or because the fact that the information has come from them has added something to its weight and authority"

In John G Glass Real Estate Pty Ltd v Karawi Constructions Pty Ltd [1993] ATPR 41-249, Davies, Heerey and Whitlam JJ upheld a decision at first instance that a real estate agent was liable under s 75B(1)(c). The agent had provided to the purchasers a brochure produced by the vendors which contained misrepresentations as to the net lettable area of the property. The agent claimed that it was not "knowingly concerned" because it had merely passed on the information. The Court said (at 41,359):

"In our opinion an estate agent which holds itself out as, amongst other things, 'consultants to institutional investors and to developers of major properties' would not be regarded by potential purchasers of properties as merely passing on information about the property 'for what it is worth and without any belief in its truth or falsity'."

Their Honours placed particular reliance on the fact that the misrepresentations related to the net lettable area which "stands on a different footing from the puffery which often accompanies the sale of real property" because it is a figure of "hard physical fact" (see 41,359).

The meaning of the phrase "knowingly concerned" has been considered in the context of criminal offences. The old s 233B(1)(d) of the Customs Act 1901 (Cth) prohibited a person being knowingly concerned in the importation of a prohibited import. In R v Tannous (1987) 10 NSWLR 303, the New South Wales Court of Criminal Appeal considered the meaning to be given to the phrase "knowingly concerned" as it appeared in s 233B(1)(d). Lee J (with whom Street CJ and Finlay J agreed) indicated that what was required was more than just knowledge, but also some act or omission which implicated or involved the accused by establishing a physical connexion between him and the offence (see 308). ...

In R v Kelly (1975) 12 SASR 389, the Full Court of the Supreme Court of South Australia considered the meaning of the word "concerned". Hogarth ACJ, Mitchell and Zelling JJ said (at 400):

"The word is no doubt deliberately chosen to cover a wide range of activities since it would be well-nigh impossible to define more closely the various acts which could go towards the fulfilment of a plan for the importation of prohibited articles."

In R v Lam (1990) 46 A Crim R 402 (NSW CCA), Gleeson CJ cited this passage with approval. The Chief Justice said (at 405):

"The expression 'concerned in' is of general import and it is impossible to state with precision what it comprehends. It is necessary to consider the facts and circumstances of the particular case." [at paras 312-322]

(b) the mental element

In Yorke v Lucas (1985) 158 CLR 661, a majority of the High Court observed that:

...a person will be guilty of the offences of aiding and abetting or counselling and procuring the commission of an offence only if he intentionally participated in it. To form the requisite intent he must have knowledge of the essential matters which go to make up the offence whether or not he knows that those matters amount to a crime. So much was affirmed recently in Giorgianni v The Queen where the relevant authorities were examined. [at 667]

A little later, their Honours said:

In our view, the proper construction of par (c) requires a party to a contravention to be an intentional participant, the necessary intent being based upon knowledge of the essential elements of the contravention. [at 670]

In Australian Competition and Consumer Commission v IMB Group Pty Ltd [2003] FCAFC 17 the Court said:

It is not necessary to establish any subjective element in relation to a contravention of Pt V of the Act. A contravention may be committed unintentionally. That is to say, a person may contravene a provision of Pt V even though that person does not have knowledge of all of the essential elements that constitute the contravention. However, before any accessorial liability will arise, it is necessary to establish the subjective element of knowledge of each of the essential elements of the contravention. That knowledge may be constructive in the same sense that it may be possible to show wilful blindness in relation to the elements of a contravention. However, absent a finding of wilful blindness, it is necessary to establish actual knowledge on the part of a person to whom it is sought to sheet home accessorial liability in respect of a contravention of PtV. [at para 135]

See also Compac Computer Australia Pty Ltd v Merry (1998) 157 ALR 1 at pp4-5; Medical Benefits Fund of Australia v Cassidy (2003) 205 ALR 402; Australian Competition and Consumer Commission v Kaye [2004] FCA 1363 [at paras 176-189].

In Pereira v Director of Public Prosecutions (1988) 82 ALR 217 the High Court made the following observations:

Even where, as with the present charges, actual knowledge is either a specified element of the offence charged or a necessary element of the guilty mind required for the offence, it may be established as a matter of inference from the circumstances surrounding the commission of the alleged offence. However, three matters should be noted. First, in such cases the question remains one of actual knowledge: Giorgianni v. The Queen [1985] HCA 29; (1985) 156 CLR 473 at pp 504-507; He Kaw Teh, at p 570. It is never the case that something less than knowledge may be treated as satisfying a requirement of actual knowledge. Secondly, the question is that of the knowledge of the accused and not that which might be postulated of a hypothetical person in the position of the accused, although, of course, that may not be an irrelevant consideration. Finally, where knowledge is inferred from the circumstances surrounding the commission of the alleged offence, knowledge must be the only rational inference available. All that having been said, the fact remains that a combination of suspicious circumstances and failure to make inquiry may sustain an inference of knowledge of the actual or likely existence of the relevant matter. In a case where a jury is invited to draw such an inference, a failure to make inquiry may sometimes, as a matter of lawyer's shorthand, be referred to as wilful blindness. Where that expression is used, care should be taken to ensure that a jury is not distracted by it from a consideration of the matter in issue as a matter of fact to be proved beyond reasonable doubt. [at pp 219-220] (emphasis added)

The liquidation of TLC does not prevent orders being made against individuals provided it can be established that the individuals were 'knowingly concerned' in the impugned conduct of the company: Australian Competition and Consumer Commission v Black on White Pty Limited [2001] FCA 187 per Spender J [at paras 51-53]. As to the accessorial liability of an individual for his or her conduct even if he or she also be the "mind of the company": see Houghton v Arms (2006) 225 CLR 553.

The evidence upon which the plaintiff relies

1. The evidence upon which the plaintiff relies is precisely the same material upon which it relied in the earlier proceedings and consists of 9 lever arch folders. I have reacquainted myself with that material. At paragraphs 24 - 27 of the second judgment I described that material in the following terms:

The plaintiff read the affidavits of the following 15 persons, 14 of whom were clients of TLC:

(i) Aaron Ashley Bennett;

(ii) Stuart Leath Childs;

(iii) Damien Clear;

(iv) Neville Crockett;

(v) Thomas Charles Gunthorpe;

(vi) Clifford James Kopp;

(vii) Janet Langley;

(viii) Sundara Rengasamy;

(ix) Veda Rengasamy;

(x) Wayne Robson;

(xi) Ashley William Ruiter;

(xii) Christine Smith;

(xiii) Linda Williams;

(xiv) Alan Westoby Young; and

(xv) Kenneth Williams Vickers.

Affidavits of the following three former TLC employees were read:

(xvi) Jessica Erin Allison;

(xvii) Kellie Stacey Arrowsmith; and

(xviii) Tracey Ann Rutledge.

Affidavits or reports from the following experts were read:

(xix) Yvonne Allen;

(xx) Professor Susan Hayes; and

(xxi) Matthew Pullen.

The final affidavit that was read was prepared by the officer who had primary responsibility for the investigation, Emma Sharkey. She produced a very considerable body of documentary evidence which consisted, inter alia, of financial records and banking records of TLC and its employees, as well as ASIC records and other material. I have referred to what some of that documentation reveals in paragraphs 6-8 of this judgment. Many of the clients were also able to produce records of their financial dealings with TLC together with other relevant correspondence.

1. At paragraphs 30 - 117 of that judgment I discussed at considerable length the evidence given by clients of TLC. Of those persons, Aaron Bennett, Clifford Kopp, Ashley Ruiter, Ken Vickers and Alan Young had direct contact with the second defendant. To that material may be added the evidence of experts (paragraphs 136 - 140), which I need not repeat. In that judgment I also referred to evidence given by three former TLC employees. Because those persons had direct contact with the second defendant it is convenient to refer to that evidence in a little closer detail.

1. At paragraphs 122 - 126 of that judgment I set out the effect of the evidence of Kellie Stacey Arrowsmith in the following terms:

Ms Arrowsmith was employed as an office junior with TLC at Tweed Heads between September 2006 and January 2007. Ms Arrowsmith's duties included filing, faxing, photocopying and telephoning potential customers who had completed the free compatibility test. She also took complaints from clients who were upset about not being suitably matched. Ms Arrowsmith was told, she thinks by Cristy Grinham, to tell potential clients that TLC had 28,000 members in Australia and New Zealand. Ms Arrowsmith regularly used the TLC database during her period of employment and estimated that TLC had, at most, 300 to 400 members registered. Her direct supervisor was Cristy Grinham but she knew that the second defendant ran the business. That was because the sales team reported to her and because she was the only one who could approve holiday leave.

Ms Arrowsmith said that she believed that the second defendant listened in on conversations between staff and TLC clients. She related an incident in January 2007 when she had called an inactive member of TLC about re-joining the company. When she was unable to convince him to rejoin, Ms Arrowsmith terminated the call. A few minutes later, the second defendant told her that she had ended the call too soon and admitted to her that she (the second defendant) had listened to the call.

Ms Arrowsmith said that when clients initially contacted TLC, they were registered on its database and then transferred to the sales team who would sell them one of the various levels of membership. Once a membership had been sold, the client was passed on to the introductions team. When the sales team identified clients with significant financial resources, the clients were referred to Paul, the second defendant's brother, who was the senior relationship consultant. He would try and sell them upgraded packages, called 'Elite' or 'VIP'. Ms Arrowsmith said that she saw summaries of both packages but could not discern any differences between them.

Although she was not directly involved in the selling of memberships, she does remember that there were 'Bronze', 'Silver', 'Gold', 'Platinum' and 'VIP' packages with separate prices. Although she said that she remembered seeing clients coming to the TLC office for 'grooming packages', she saw no evidence that TLC staff organised overseas trips or gala balls.

Ms Arrowsmith said that she also believed that TLC staff stayed on the line after they had transferred clients to their banks in order that they could find out their account balances. Following an argument with Cristy and Helen, Ms Arrowsmith was asked to resign. When she refused to do so, she was dismissed.

1. In addition to that material, it may be observed that Ms Arrowsmith stated that "it was immediately clear to me that Helen had overall control of the company ... whenever she told staff to do something they did it". Indeed, when Ms Arrowsmith was introduced to the second defendant by Ms Grinham, she said that she was described as the "owner" of the company. She said that the second defendant was sometimes referred to as "Helena". She also said that there was a "filing cupboard/ system" located in a small alcove outside the second defendant's office which contained "hard copy files for each client".

1. At paragraphs 118 - 121 of that judgment I referred to the evidence of Jessica Erin Allison in the following terms:

Ms Allison worked as a contracts' administrator with Love Network Pty Ltd ("Love Network") which was located in Southport, Queensland, between April and August 2009. Her duties included the preparation of membership agreements, telephoning customers who registered interest through the internet or over the telephone, and booking weekend packages.

She was introduced to the second and third defendants who both worked in premises two suites up from Love Network called "Stangs Finance". She said that she saw the third defendant come in about two days a week. However, she said that she had frequent contact with the second defendant. She also saw the first defendant in the same suite. While visiting the Stangs Finance office suite, Ms Allison overheard telephones being answered with the words "True Love Corp" which she believed to be a branch of Love Network.

In about June 2009, Ms Allison began answering the telephones for TLC. She was instructed by Kelsie Dubois-Smith, who moved from the Stangs Finance suite to the Love Network suite, that she should use a different name when answering the TLC lines. She was also instructed to say something in order to keep the TLC clients happy until either he was able to return their calls or the callers hung up. She answered the TLC lines by saying "True Love Corp" and giving her name as Sasha, Mia or Sarah. Many of the calls she took were complaints from clients about not receiving introductions or being required to 'upgrade' memberships.

Ms Allison was able to access TLC client records during her period of employment. She also recalled seeing a commission structure for consultants although she was not sure whether it referred to TLC or Love Network. The base salary was $500 per week with commissions of 5% for sales of $10,000, 15% for sales of $15,000 and 20% for sales of $20,000.

1. In addition to that material, I should record that Ms Allison said that in her capacity as an employee of "Love Network", her initial focus was upon clients in Queensland, many of whom were former clients of TLC. She said that when "Love Network" began taking clients from outside Queensland, she was requested to transfer "clients from the TLC database". Ms Allison said that the second defendant recruited staff for "Love Network". According to Ms Allison, the second defendant also asked her to draw up membership contracts for clients who resided outside Queensland. She said that after the operations manager of "Love Network" resigned, the second defendant became more involved by walking around the office and questioning staff about the progress of their work. Ms Allison said that the second defendant's job title was as the "owner of TLC and Love Network" and that she used the alias "Kimberley". She described the second defendant as "impossibly difficult to please and horrible to her staff".

1. At paragraphs 127 - 135 of that judgment I referred to the evidence of Tracey Ann Rutledge in the following terms:

Ms Rutledge was employed as a bookkeeper with TLC at its offices at Tweed Heads from June 2004 until her resignation in September 2007. Her duties included data entry, receipting client payments, bank reconciliations, preparing GST reports and liaising with the company's accountant.

She said that when she first started working there she reported to two persons, one of whom was the second defendant. Although there were few permanent employees when she started, she estimated that TLC employed about 150 employees during the time that she was with the company, although most of them were juniors who worked for only a couple of weeks.

As the company's bookkeeper, Ms Rutledge was in a perfect position to observe who controlled the day to day running of the company. She said that she reported directly to the second defendant. She said that although she herself prepared the payroll reports, the second defendant approved them. Ms Rutledge went on to say that if the second defendant was away, she (the second defendant) authorised someone else to approve the reports. She also said that the second defendant approved the purchase of stationery and equipment and authorised payments of expenditure.

During her last year of employment, Ms Rutledge was instructed by the second defendant to put both the third defendant and herself (the second defendant) on the payroll. She said that they each received about $300 to $400 per week.

Ms Rutledge said that the second defendant had control of the company's accounts with the National Australia Bank and Westpac. The NAB account was a cheque account used for BPay and credit card deposits and the Westpac account was a cheque account. Direct deposits went into both accounts. She said that she did not ever see a company credit card. Ms Rutledge said that payments of between $1,000 and $20,000 were regularly transferred from the NAB and Westpac accounts to the second defendant's personal credit card accounts.

Ms Rutledge also said that she was aware of occasions on which money was debited from clients' credit card accounts without their authorisation.

On one occasion, Ms Rutledge said that she saw the second defendant listening into telephone conversations between sales staff and clients. There were other occasions when Ms Rutledge overheard the second defendant telling a sales staff member to "get back on the phone and upgrade him [a client]".

Ms Rutledge recalled that TLC had a few different packages including a 'grooming package'; a 'Fiji package'; and in 2005, a Melbourne Cup event. With respect to the Melbourne Cup event, she saw the invoice for a booking at the Crown Casino for the second and third defendants. She said that she recalled that clients were booked in hotels in the outer suburbs of Melbourne. She said that she was unaware of any bookings being made for the 'Fiji package'.

Ms Rutledge was shown a series of photographs by investigators. Five of the photographs depicted TLC staff including the first and second defendants. Ms Rutledge was also shown a photograph with the heading "Dimitra ref: 219146" and was asked whether she recognised the woman. Ms Rutledge said that she did not recognise the woman but maintained that her photograph had been used for marketing purposes. Ms Rutledge said that photographs of women had been taken from the internet and passed off as female client profiles.

1. In addition to that material, I should record that Ms Rutledge said that she was informed that the second defendant was "your boss" and was introduced to her in those terms. Her contract of employment stipulated that she was to report directly to the second defendant or another nominated person. It was further stipulated that leave must be approved by either of those two persons and that computer passwords could not be changed without the consent of either of those two persons. Ms Rutledge stated that during her period of employment the second defendant was the only person with the name of "Helen". A staff telephone list for TLC confirms that information.

1. Ms Rutledge said that the second defendant was responsible for payroll activities and was in contact with Payline (the organisation that made payments and generated pay slips to the employees). As I already indicated, the second defendant was put on the payroll in 2007. Subpoenaed material revealed that, in the period between 16 May and 1 July 2007, she received a gross salary of $9,310. For the 2007 - 2008 financial year she received a salary of $136,362, whilst for the 2008 - 2009 financial year she received $98,550. There is other material, to which I need not refer, which also establishes a connection between Payline and the second defendant.

1. Ms Rutledge stated that the second defendant's office was positioned in such a fashion as to enable her to observe the staff. She said that her computer was able to access what TLC staff were typing into their own computers. Moreover, Ms Rutledge heard the second defendant tell staff that if they did not meet sales targets, she would not allow them to take their holidays.

1. I referred in the second judgment, to Ms Rutledge's evidence concerning arrangements for the Melbourne Cup event. That evidence provides some support for the evidence given by both Ashley Ruiter and Ken Vickers concerning their attendance at that function. Similarly, her evidence concerning a "Fiji package" provides support for the evidence given, in respect of that matter, by Ashley Ruiter and Clifford Kopp.

1. The material before me also establishes a connection between the second defendant and TLC's banking activities. It reveals the existence of a business cheque account for the "The Secretary TLC Consulting Services Pty Limited PO Box 484 Tweed Heads". Records show that regular withdrawals were made from that account to meet what was described as a "loan repayment" and a "business loan repayment" for the second and third defendants. The couple also held a further joint NAB Business Cheque Account, whilst the second defendant held a separate NAB Flexi-Account. TLC Consulting Services also held a Westpac Business Cheque Plus Account. Furthermore, the second defendant was listed as the contact "person" for internet domain holder TLC Consulting Pty Limited for the website "truelovecorp.com.au".

The response of the second defendant

1. The second defendant has not filed a Defence. Nor has she served any evidence which might serve to challenge the evidence relied upon by the plaintiff.

The liability of TLC

1. At paragraphs 142 - 149 of the second judgment, I referred to the liability of TLC in the following terms:

The material reveals that through its agents, TLC employed a number of different techniques in order to extract money from its clients. Nevertheless, a number of common themes emerge from the evidence. The fact that more than one client provides a similar account adds a measure of cogency to their version of events.

It is convenient to now identify some of the common techniques that were used by TLC. (As I said earlier most of the clients were men. For convenience I shall simply refer to the persons to whom introductions were made as women);

(a) making representations that clients needed to pay more money to 'upgrade' to a 'higher level of service' in order to meet compatible women when, by and large, those services were not provided;

(b) making representations that there was a particular person who was 'perfect' for the consumer, but that it was not possible to introduce the consumer to the person unless the consumer paid more money to 'upgrade' to a higher level, or paid money to attend a 'grooming weekend', at which excuses were made that the woman who was a 'perfect match' could not attend;

(c) making representations (both by telephone and in person when the client went to the Tweed Heads/Gold Coast area on a 'grooming weekend') that it was necessary for the client to pay further monies in order to meet a particular woman who was said to be interested in the client. Some clients were also pressured to 'lend' money to the woman by making payments to TLC, because the woman had particular financial problems (e.g. Thomas Gunthorpe; Alan Young). When the clients paid the money, repeated excuses were provided as to why the consumer could not meet the woman. (In some instances the overwhelming inference is that the women did not exist);

(d) making representations that the client had to pay more money because they had 'underpaid', for example, for 'upgrades' or attending a 'grooming weekend';

(e) convincing three clients (Aaron Bennett, Ashley Ruiter and Kenneth Vickers) to pay money for a holiday in Fiji to be organised by TLC, on which the client would meet suitable women. Such holidays to Fiji never occurred, despite the clients having paid for them;

(f) convincing two consumers (Kenneth Vickers and Ashley Ruiter) to pay money to attend a function at the 2005 Melbourne Cup at which female TLC members and 'Penthouse Pets' were going to be present and in respect of which accommodation at Crown Casino was to be provided. Although the event took place, neither female TLC members nor 'Penthouse Pets' were in attendance and nor was accommodation at Crown Casino provided;

(g) convincing consumers (e.g. Stuart Childs; Clifford Kopp) to pay money for an extravagantly priced mobile telephone which had 'special software' on it and which, when delivered, did not contain 'special software';

(h) using emotionally manipulative language to pressure consumers to pay monies to TLC. On occasions consultants used language that belittled and humiliated the clients, while promising them that if they paid further monies, their problems would be solved and that they would meet a woman who was 'perfect' for them. I have already referred to several such examples. To reiterate, the first defendant told Clifford Kopp in May 2008 that "I think you can afford it...you can't put a price on falling in love with the right lady...how would you feel if all your life you had no one special in it? When you pass away, no one will remember you"; and saying to him in April 2009 "Cliff, stop being a child and get over it. Everyone has financial problems. Now tell me what are you going to think when you are 80 and lying on your death bed? Gee, I've been a bus driver all my life and I have nothing to show for it". By way of further example, in February 2008 the first defendant told Wayne Robson that he needed to pay $20,000 in order to meet Rebecca and that "she'll be your dream lady and you'll get to spend your life together. Rebecca definitely wants to meet you and be with you".

(i) pressuring clients to pay more money because the TLC consultant had paid part of the fees for an 'upgrade' on behalf of the client, or had given a 'discount' and would lose their job if the monies were not paid. Examples of such conduct are the first defendant telling Damian Clear in December 2008 at a 'grooming weekend' that she could lose her job if he told anyone that he had been introduced to a woman on a more expensive membership, and telling Clifford Kopp in May 2008 that he would have to pay the "full amount" for a package which involved the provision to him of psychiatric and nutritional advice or she would lose her job;

(j) pressuring clients such as Stuart Childs and Ashley Ruiter to sign contracts without first reading them, or after they had consumed significant amount of alcohol, when attending 'grooming weekends'. The client would then be told that they must pay more money as they had signed a contract;

(k) pressuring clients to take out loans in order to pay monies to TLC, and then facilitating such loans. Examples of such conduct are the first defendant pressuring Clifford Kopp to take out a loan in July 2008 (including sending him documents from Stangs), and pressuring Wayne Robson to take out a loan in early 2008;

(l) refusing to refund monies to clients when they complained about the lack of service, and telling consumers that they would be sued for defamation or 'humiliated' in court if they took any action against TLC. An example of such conduct is the woman who introduced herself as a "female director" of TLC who told Stuart Childs in April 2009 that "we are a big international company, so don't muck us around".

The overwhelming impression which emerges from the evidence is that TLC's agents took every opportunity to target people (usually men) at a time when they were emotionally vulnerable. In some instances, the client lived in a remote location. Some had recently lost, or been separated from, a partner. Some clients (such as Damien Clear and Sundara Rengasamy) suffered from either a physical or an intellectual disability whilst Wayne Robson had difficulty reading and writing. Many of them were desperately lonely. In any event, what they each had in common was a deep yearning for a measure of personal fulfilment in their lives, a desire which made them susceptible to the extravagant claims which were made by TLC's agents who were prepared to exploit the situation in which the clients found themselves.

At face value it may seem extraordinary that a number of the clients were prepared to expend what were clearly exorbitant sums of money over extended periods of time for services that were not provided either at all, or to only a limited extent. Clearly many of the clients were very gullible. Presumably they felt that having committed themselves financially, they had no alternative but to see the matter through. Ultimately, however, the explanation for what occurred lies in the fact that through its agents, TLC was prepared to go to just about any lengths in order to extract money from its clients.

Whilst it is apparent that TLC did provide some introductions, it is also equally clear that, on many occasions, the person who was introduced did not have the characteristics or profile which the client had indicated that he or she was interested in.

There can be no doubt that TLC was a corporation which was engaged in "trade or commerce": Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 at 604. Moreover, it continued as I have said, to have contact with persons in NSW even after it moved to Queensland.

Bearing in mind the material to which I have referred, I am satisfied to the requisite standard that the plaintiff has demonstrated that TLC engaged in misleading and deceptive conduct within the meaning of s 52 of the TPA and s 42 of the FTA . I am equally satisfied that it also engaged in unconscionable conduct within the meaning of s 51AB of the TPA and s 43 of the FTA . In reaching the latter conclusion, I have placed particular emphasis upon paragraph 61 of the judgment of Bell J in Monaghan (supra) to which I referred earlier.

The question which then arises is whether the plaintiff can establish that each of the first and third defendants should, by reason of s 75B(1)(c) of the TPA and s 61 of the FTA , be held liable for those contraventions.

1. Those remarks remain equally apposite to the present proceedings.

Liability of the second defendant

1. At paragraphs 153 -155 of the second judgment I observed, in determining the liability of the third defendant, that:

Considerable emphasis was placed by the plaintiff, in its submissions concerning the third defendant's liability, upon the orders made by Atkinson J which are set out in paragraph 4 of this judgment. It was submitted that given the nature, content and terms of those orders the third defendant had, in consenting to them, made an 'admission' within the meaning of the Evidence Act 1995 (NSW) . An 'admission' is defined as meaning a "previous representation" that is "adverse to the person's interest in the outcome of the proceeding". A "previous representation" is defined as "a representation made otherwise than in the course of giving evidence in the proceeding in which evidence of the representation is sought to be adduced". It was submitted that since the orders restrained him, and TLC, from engaging in the activities of an introduction agency and required them to pay considerable sums of money to nominated persons, it could be inferred that the first defendant was complicit in the activities of TLC as 'an introduction agency' at least as at 30 April 2003.

I accept those submissions. Even if I am wrong in concluding that what was contained in the orders constituted an "admission", I accept that the plaintiff can still rely upon that material. Although s 91 of the Evidence Act prevents the plaintiff from relying upon it in order "to prove the existence of a fact that was in issue in that proceeding", I nevertheless accept that the material could nonetheless be utilised to demonstrate that the third defendant had, as from 30 April 2003, a very clear awareness of what it was that TLC was then prevented from doing. See generally Ainsworth v Burden [2005] NSWCA 174 [at para 109].

The similarity between the conduct of TLC in these proceedings in which the third defendant is alleged to have been "knowingly concerned", and the conduct of both TLC and the third defendant, which was the subject of the orders made by Atkinson J, is stark indeed. In my view, there exists a powerful inference pointing to the third defendant's liability in these proceedings on either interpretation of the use to which the orders of Atkinson J may be put.

1. Those observations are equally apposite to the present proceedings. Upon the evidence that has been adduced in these proceedings, it is manifestly clear that the person variously referred to as "Helen" or "Helena" is the second defendant. Furthermore, the evidence conclusively establishes that she was intimately involved in the activities of TLC and that she performed a significant role in directing and controlling its conduct. Apart from supervising the activities of TLC's employees, she controlled the company's bank accounts and she derived significant financial benefits from its operation.

1. At paragraph 151 of the second judgment I made the following observation about the fact that the first defendant had not given or adduced evidence:

Finally, I observe that none of the plaintiff's evidence has been tested. Furthermore, there is nothing on the face of the evidence which would incline me not to accept it. Nor, as I have said, has the first defendant given, or adduced any evidence of her own. Since no explanation has been advanced for the failure to do so, it is appropriate to draw a "Jones v Dunkel" inference. See generally, Galea v Bagtrans Pty Limited [2010] NSWCA 350 per Allsop P [at para 2]; per Hodgson JA [at paras 50-61]; National Australia Bank Ltd v McCann [2010] NSWSC 766 per Davies J [at paras 72-4].

I adopt those remarks for the purposes of the present proceedings.

1. In my view, the only rational inference to draw from the evidence is that the second defendant had the requisite knowledge of "the essential elements of the contravention[s]" by TLC of the relevant legislation. At the very least, she exhibited a measure of "wilful blindness" in the sense in which that expression is used in the authorities.

Findings

1. I make the following findings:

(a) Between 1 March 2003 and 3 August 2009, TLC engaged in conduct which was misleading or deceptive, or likely to mislead or deceive within the meaning of s 52 of the TPA and s 42 of the FTA . It also engaged in conduct which was unconscionable within the meaning of s 51AB of the TPA and s 43 of the FTA ;

(b) The second defendant was directly or indirectly, knowingly concerned in or a party to, the said contraventions of TLC within the meaning of s 75B of the TPA and s 61 of the FTA .

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Decision last updated: 18 August 2011